Ample Source International Limited v Bonython Metals Group Pty Limited (in liquidation), in the matter of Bonython Metals Group Pty Limited (in liquidation) (No 8)

Ample Source International Limited sought judicial advice on the conduct of the liquidation of Bonython Metals Group Pty Limited (BMG) in the Federal Court of Australia. The liquidators, Michael Andrew Owen and David Leigh, sought guidance on the scope of an indemnity provided by Pure Metals, the company that funded the liquidation. The primary issues were whether the liquidators could rely on the indemnity for legal expenses incurred in defending a proceeding concerning the sale of an asset, and whether the liquidators were required to reimburse Pure Metals from recoveries made from the asset sale. The court found that the liquidators could rely on the indemnity for legal expenses as per the deed of assignment. Additionally, the court held that the liquidators could apply the rule in Cherry v Boultbee to the distribution of assets among the company's contributors. The court also noted that the liquidators were justified in paying Pure Metals from the assets of BMG the amount still owing in connection with the indemnity.

The Federal Court considered the liquidators' discretion in managing the liquidation process and the principle that courts should refrain from giving directions on commercial decisions unless there is a legal issue at stake. The court determined that the liquidators' decisions about the indemnity and distribution were subject to legal scrutiny due to the significant disputation and threats of litigation during the liquidation. The court concluded that it was appropriate to provide direction on these matters given the legal issues involved. The court granted the liquidators the authority to proceed with the liquidation based on the indemnity arrangement and the application of the rule in Cherry v Boultbee.